Cellspan™:A novel cell therapy platform to regenerate tubular organs

June 2019

This presentation contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of such words as “before,” “track,” “will,” “should,” “could,” “anticipates,” “intends,” “guidance,” “objectives,” “optimistic, “ “future,” “expects,” “plans,” “estimates,” “continue,” “drive,” “strategy,” “potential,” “potentially,” “growth,” “long-term,” “projects,” “projected,” “intends,” “believes,” “goals,” “sees,” “seek,” “develop,” “possible,” “new,” “emerging,” “opportunity,” “pursue” and similar expressions that do not relate to historical matters. Forward-looking statements in this presentation may include, but are not limited to, statements or inferences about the Company’s or management’s beliefs or expectations, including with respect to the effectiveness and design of its product candidates, success of its collaborations, clinical trials and pre-clinical development efforts and programs, and its ability to obtain and maintain regulatory approval for its implant products, bioreactors, scaffolds and other devices we pursue, including for the esophagus or airway; the outlook for the life sciences industry and the field of regenerative medicine; the Company’s current products or products in development; the Company’s business strategy; the Company’s anticipated regulatory approvals; future revenues and earnings; the strength of the Company’s market position, business model and intellectual property rights; opportunities or potential opportunities in the field of regenerative medicine and related markets; the success of treatments utilizing the Company’s products or product candidates; the market demand and opportunity for the Company’s products, or the product candidates it is developing or intends to develop and the Company’s plans, objectives and intentions that are not historical facts.

These statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause the Company’s actual results to differ materially from those in the forward-looking statements include the success of the Company’s collaborations, clinical trials and pre-clinical development efforts and programs, which success may not be achieved on a timely basis or at all; the Company’s ability to obtain and maintain regulatory approval for its implant products, bioreactors, scaffolds and other devices it pursues, including for the esophagus or airway, which approvals may not be obtained on a timely basis or at all; the Company’s ability to access debt and equity markets and raise additional funds when needed; the number of patients who can be treated with the Company’s products; the amount and timing of costs associated with the Company’s development of implant products, bioreactors, scaffolds and other devices; the Company’s failure to comply with regulations and any changes in regulations; unpredictable difficulties or delays in the development of new technology; the Company’s collaborators or other third parties we contract with, including with respect to conducting any clinical trial or pre-clinical development efforts, not devoting sufficient time and resources to successfully carry out their duties or meet expected deadlines; the Company’s ability to attract and retain qualified personnel and key employees and retain senior management; potential liability exposure with respect to the Company’s products; the Company’s inability to operate effectively as a stand-alone, publicly traded company; the actual costs of separation may be higher than expected; the availability and price of acceptable raw materials and components from third-party suppliers; difficulties in obtaining or retaining the management and other human resource competencies that the Company needs to achieve its business objectives; increased competition in the field of regenerative medicine and the financial resources of its competitors; the Company’s ability to obtain and maintain intellectual property protection for its product candidates; the Company’s inability to implement its growth strategy; plus factors, plus factors described under the heading “Item 1A. Risk Factors”, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on March 29, 2019 or described in the Company’s other public filings. The Company’s results may also be affected by factors of which the Company is not currently aware. The Company may not update these forward-looking statements, even though its situation may change in the future, unless it has obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Except as otherwise noted herein, any forward looking statements represent the Company’s estimates as of March 14, 2019 and should not be relied upon as representing our estimates as of any other date.

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Forward-Looking Statements

• Biostage has a proprietary platform technology to repair and regenerate the esophagus, bronchus, and trachea including pediatric and adult conditions

• Our first indication for IND (Investigational New Drug) is for adult esophageal disease

• Our first indication to Market is a pediatric esophageal atresia solution

• Cellspan Esophageal Implant (CEI) product is a proof of concept for other tubular organ repair and regeneration for which we have been granted a US patent

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Repair and Regeneration of the Esophagus, Bronchus, and Trachea

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Our Cellspan Technology Stimulates Tissue Regeneration in Tubular Organs

Cellspan Technology: • Combines our proprietary synthetic organ

scaffold (temporary cell delivery device) with patient’s mesenchymal stem cells

Cellspan Esophageal Implant (CEI):• Our first product candidate addresses

esophageal atresia in children born with an esophagus that does not reach their stomach

• Scaffold remains in body temporarily and removed non-surgically after 3-4 weeks

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Our Transition to Clinical Stage

First-In-Human at Mayo Clinic:

• Successful regeneration of the esophagus in a 75-year-old patient

• Consistent results with large animal studies

• FDA-approved compassionate use procedure

Second IND 2020• IND for pediatric CEI to be

filed in early 2020

• Pediatric studies funded in part by $1.8M grant from National Institutes of Health

First IND 2019• Filing IND with FDA for

clinical trial in Q3

• Phase I feasibility study planned for 5-10 patients

• Establishes safety profile for pediatric atresia IND

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Cellspan: Robust Platform Technology

Robust Pipeline: Additional solutions to treat other esophageal diseases, including non-surgical uses

Platform Technology:We are extending beyond the esophagus to other tubular organs, including the bronchus and trachea

Orphan Drug Designation:Biostage has received orphan drug designation from the FDA; our CEI could gain seven years of market exclusivity upon approval

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Top-tier Partners and Advisors

•Research and clinical partners •Mayo Clinic•Connecticut Children’s Medical Center•University of Texas Health Science Center at Houston

•Scientific Advisory Board of tissue engineering pioneers

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Financial Profile

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• Currently trading on OTCQB (BSTG)• ~75% of shares held by long-term shareholders/insiders

• Approximately 1.8M shares public float • Extremely low liquidity

• Clean capital structure – No toxic terms (e.g. ratchets), no debt• $58M invested to date

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Principles of Cellspan Technology

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TissueEngineeringComponents

EngineeredTissue

Bioreactor Stem Cells

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Biomaterial Scaffold

Note: In addition to delivering cells, our scaffold can also be used for the delivery of small molecules, protein therapeutics, etc.

Rapid healing response with regeneration over the CEI

The CEI is interpositionedafter esophageal resection

Scaffold is removed endoscopically via the mouth at 21 days

Scaffold Removed at 21 Days | The Living Tube

DAY 21 DAY 361

Continuous regeneration process

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Regeneration Sequence of the CEI

CEI-MSCs deliver angiogenic factors CEI-MSC ECM deposition supports tissue growth

Adventitia

4. Regeneration process migrates across the newly-forming epithelial mucosal tissue

1. CEI is implanted in esophagus gap, held in

place with sutures

Fibrovascular TissueNative Esophagus

Initial Implant and Early Tissue Regeneration (3 weeks)

Tissue Regeneration (12 weeks)

Mucosae Muscularis Regeneration and Migration

Tunica Muscularis Regeneration and Migration

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3. At three weeks post-surgery, sutures dissolve, scaffold is

removed endoscopically2. CEI delivers cells and provides mechanical support;

MSC/ECM deposition supports tissue growth;MSCs deliver angiogenic factors

Native Esophagus

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Our technology platform may significantly improve treatment options for tubular organs

Restoring function through reconstruction of any portion

of the trachea with the Cellspan Tracheal Implant

Tracheal Disease and Trauma

Restore airway function, sparing a lung, with the

Cellspan Bronchial Implant

Non Small Cell LungCancer (NSCLC)

Restore native esophagus function with the

Cellspan Esophageal Implant

Pediatric Atresia &Esophageal Disease

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Targeted Markets

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Further product development opportunities• Deploying CEI endoscopically instead of surgically — serves a broader patient population (mucosal-

only cases, fistulas) and provides earlier treatment in the esophagus paradigm• Improved function for use as a long-segment surgical product• An off-the-shelf cell therapy solution avoiding need and waiting time for a biopsy

Cellspan Esophageal Implant Pipeline

Initial CEI target indications• Pediatric (Esophageal Atresia) — congenital defect requiring surgical intervention• Adult — End-stage esophageal disease, early-stage cancer, intractable strictures, non-healing

chronic fistulas, caustic burns, trauma

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Our first targeted patient population:Underserved pediatric patients with inadequate current standard of care

• One in 2,500-4,000 babies born with esophageal atresia (EA) worldwide

• One portion of EA cases are “long gap” EA, which have high failure rates that lead to multiple surgeries

• Prior treatment failures using current methods have led to a pool of children waiting for a possible solution

• Potential to earn a Rare Pediatric Disease Priority Review Voucher from the FDA which is transferable; recent transfers – approximately $100 million

• We have FDA Orphan Drug Designation and expect breakthrough designation

Esophageal Atresia | Our First Indication to Market

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Long gap EA standard of care: high direct costs

• Children spend months in intensive care unit

• High incidence of multiple procedures over years of treatment

• Average cost of care in U.S. over $500K per patient

We plan to solve these problems by advancing CEI as the new standard of care for long-gap EA.

We aim to deliver a high value solution to this orphan pediatric patient population, while providing cost savings to the healthcare system.

We expect a small pediatric esophageal atresia phase I trial of approximately 5 patients.

Esophageal Atresia | Our First Indication to Market

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Connecticut Children’s

Medical Center is serving as a pivotal site to advance the

Biostage pediatric

esophageal atresia program

Led by Christine Finck, MDScientific Advisory Board Member

Active collaboration with Connecticut Children’s Medical Center

EVP and Surgeon-in-ChiefConnecticut Children’s Medical Center

Associate Professor of Pediatrics and SurgeryUCONN Health

Leading Partner in Esophageal Atresia ResearchConnecticut Children’s Medical Center

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Stomach Pull Up Intestinal Resection

Current Treatment

• Complex surgical resection requiring stomach and /or intestinal “pull up” to create replacement esophagus

Unmet Need

• High rate of complications, low quality of life and heavy impact on mortality

Adult Esophageal Disease | Our Second Indication to Market

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Mayo Clinic is one of Biostage’s longest ongoing partnerships in

adult esophageal and bronchial

disease research

Mayo’s Dennis Wigle, MD, PhD and Johnathan Aho, MD lead Mayo Clinic’s collaboration with Biostage

Perennial top medical institute in the US

Conducted the successful first-in-human use of a Cellspan Esophageal Implant

Collaboration on preclinical adult esophageal and bronchial research

Leading Partner in Adult Esophagus Regeneration | Mayo Clinic

Dennis Wigle, MD, PhD• Chair of Mayo Clinic General Thoracic Surgery• Chair of Mayo Clinic Stem Cell Oversight Committee• Chair of Regenerative Medicine Biotrust, Mayo

Clinic Center for Regenerative Medicine

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Experienced Leadership | Dedicated Team

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Jim McGorry, MBAChief Executive Officer

Hong Yu, CFAPresident

Bill Fodor, PhDChief Scientific Officer

Seasoned Life Science executive with more than 30 years of leadership experience in medical technology and biotechnology businessesPrior: Genzyme, Champions Oncology, Baxter Healthcare

Accomplished leader with extensive knowledge of strategic analytics, wealth management and investment researchPrior: Bank of America

Over 25 years of research, management, training and consulting experience in academia and the biotechnology industryPrior: Yale School of Medicine, Alexion Pharmaceuticals, University of Connecticut Center for Regenerative Biology, ViaCell, Cell Therapy Group

Peter Chakoutis, CPADirector of Finance

Seasoned Finance leader with background in small to mid-sized life science companiesPrior: HeartWare, Caliper Life Sciences, DUSA Pharmaceuticals

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Experienced Leadership | Scientific Advisory Board

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Charles S Cox, Jr, MD University of Texas McGovern

Medical School Director, Children’s Regenerative

Medicine

Christine Finck, MD, FACS Executive VP, Surgeon-in-Chief and

Peter Deckers Endowed Chair of Surgery and Chief of Pediatric Surgery,

CT Children’s Medical Center

Stephen Badylak,DVM, PhD, MD

SAB Co-ChairmanProfessor, Department of SurgeryDeputy Director of the McGowan

Institute for Regenerative Medicine

Joseph Vacanti, MDSAB Co-Chairman

Surgeon-in-Chief of pediatric surgery, Mass General Hospital, member of National Academy of Sciences, and

President of American Pediatric Surgical Association

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Appendix

• Competition Pediatrics• Competition Adult disease• Intellectual Property• Board of Directors

Pediatric Atresia Treatment Landscape

Current First Line Therapy For Long GAP (>4cm) — Foker Procedure:• High cost associated with long ICU/Hospital stay(s) and multiple surgical procedures• Technical complexities and prone to failure• All require fundoplication to treat GERD and some require repeated dilations• Complications include developmental issues resulting from babies being put into a deep coma

Current First Line Therapy For Short GAP (<4cm) — Flourish Device (Magnet):• Cannot use when tracheoesophageal fistula (TEF) exists — 92% of EA cases have TEFs• Patient has to be less than 1 year old with no teeth• Complications include strictures requiring dilations, GERD and respiratory problems

Biostage Cellspan Esophageal Implant (CEI) advantages:• Less invasive surgical procedure versus Foker procedure or esophageal replacement

• Will initially start as a repair of repair• In long-run could be the first line therapy for long-gap and short-gap (with TEFs)

• No anastomic leak and low complications

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Adult Esophageal Disease Treatment Landscape

Current surgical treatments for esophageal diseases include gastric pull-ups and colonic interpositions • Require 2nd operating field and result in many complications, including anastomotic leak, strictures

requiring dilations, GERD, respiratory issues, etc.

Biostage’s CEI is a simplified surgical procedure in duration and complexity• CEI stimulates a regenerative process resulting in a neoconduit

• Avoids use of conduits such as the colon, small bowel and stomach• Does not require 2nd operating field, avoids complications of current treatments

• CEI results in lower surgical complexity and recovery, reduced hospital stay(s), and a significant improvement in the patient’s quality of life

• CEI could complement current surgical treatments when used as a patch to avoid anastomotic leak

CEI as a patch could greatly expand patients eligible for CEI and improve the efficacy when repairing fistulas or in combination with EMR/ESD

• Current challenges are strict patient selection criteria and difficulty of completely removing cancer tissue

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Technology Platform: Intellectual Property

5 issued US patents and numerous foreign applications covering:• Biomaterials, cell biology, tissue engineering, and bioreactor• Unique retrievable scaffold for tubular organs creates a biologic conduit that grows with patient• Meshes and patches

The patent for the retrievable scaffold, which has a significant safety advantage over traditional scaffolds, is the critical IP for future development.

Traditional scaffolds have safety issues• Permanent scaffold embedded in body leads to immuno-rejection over time• Bio-degradable scaffold safety concerns caused by tissue regeneration versus scaffold degradation timing, and how the body absorbs the leftover scaffold residue

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Partners across the Pacific are helping bring Biostage to a new market

with thousands of potential

patients

New subsidiary efforts lead by Jason Chen, Chairman of Board of Directors

Esophageal cancer in China:Largest patient population, approximately

300K new diagnoses annually

Senior VP, Business Development at Digitone, CEO of subsidiary DST Robotics

Broad experience bringingbusiness to the Chinese market

Biostage & China | Highest Incidence of Esophageal Cancer

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Experienced Leadership | Board of Directors

Jason Chen, MBAChairman

DIGITONEFORMICA

BARCO

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Jim McGorry, MBADirector and CEO

SANOFI GENZYME CHAMPIONS ONCOLOGY

BAXTER

James Shmerling, DHA, FACHEDirector

CONNECTICUT CHILDREN’S HOSPITALCHILDREN’S HOSPITAL COLORADO CHILDREN’S HOSPITAL VANDERBILT

Wei Zhang, MD, PhDDirector

WUXI APPTECPEKING UNIVERSITY

CEIBS

Ting Li, MSDirector

DONGHAI SECURITIES CO.JILIN ENTERPRISE CHAMBER OF COMMERCE

Jeffrey Young, CPADirector

AXIAL BIOTHERAPEUTICSJUNIPER PHARMACEUTICALS

OVA SCIENCETRANSMEDICS

Matthew Dallas, CPADirector

AVEO ONCOLOGYCOLUCID PHARMACEUTICALS

GENZYMENEN LIFE SCIENCES

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